We believed that bitcoin volatility was a thing of the past. Then it plummeted to $95,000.

The bitcoin roller coaster. If just a month ago bitcoin reached its maximum value of $123,000, now we find ourselves with an extraordinary drop that has reached almost a quarter of its value: this weekend bitcoin reached collapse up to $93,000. The question, of course, is why?

The potential reasons. Although on other occasions there have been clearer reasons for sudden positive and negative movements, this time the geopolitical and economic panorama had not undergone major changes. Even so, there are several factors that may have influenced this notable drop.

• The traditional stock market has also been falling for days, which normally also marks the future of bitcoin and other cryptocurrencies.
• Some analysts indicate that the US Federal Reserve will cut rates in December, which will make investments in cryptocurrencies less attractive.

They all sell: “whales” and holders. That has apparently sparked a rush to sell and a bearish move that has affected all investors. The famous whales with huge amounts of bitcoin seem to have taken the opportunity to collect profits, but even individual investors who had been keeping their bitcoins safe for years (“holders” or “hodlers”, in the slang) have also withdrawn from their positions. Even so, short-term investors (Short Term Holders) have once again been according to CryptoQuant those that have influenced the price the most.

A “lost” fortune. According to the crypto analytics company CryptoQuant, about 815,000 BTC have been sold in the last 30 days, the highest figure since the beginning of 2024. In the last month and a half, no less than 1.1 trillion dollarsand many cryptocurrencies have lost all or much of what they had gained during the year.

“Extreme fear”. A website called “Crypto Fear & Greed Index” evaluates the state of the crypto market based on messages and movements that occur over the days. In one week that index has gone from “fear” (29) to “extreme fear” (14). Or what is the same: many investors sell out of fear of even steeper falls.

Widespread falls. As is often the case in the cryptocurrency market, bitcoin’s movements mark a contagious trend. Ethereum fell 12% in a week to $3,183, while other popular tokens such as XRP, BNB, Tron, Solana, Dogecoin or Cardano were around 16% down.

But. There are investors who take advantage of these falls to further strengthen their position. Michael Saylor, CEO of Strategy, published the phrase “Big week” in X and denied rumors that it was going to partially withdraw from the market. In fact, there has repeated over and over again that not only was it not selling, but “we have bought bitcoin every day this week.” There are theories for all tastes, and other analysts relate this fall to the so-called M2, a measure of available liquidity. If one compares the trends of M2 and bitcoin, assuresthat reveals that bitcoin will regain ground in the short term.

Get ready for the curves. These days we are experiencing significant falls among large technology companies and the fear that the hypothetical AI bubble will burst is especially high. This seems to have influenced investors in the crypto world, who have taken the opportunity to correct positions perhaps waiting for new events (such as the announcement of rate cuts, if they occur).

This volatility is different from the old one. The uncertainty and volatility are reminiscent of years ago, when the falls and rises in value of bitcoin and other cryptocurrencies were enormous. The difference now is that for years bitcoin and cryptocurrencies have ended convincing the institutional market. In fact, CryptQuant analysts indicate that “the whales are accumulating (bitcoin) in a big way, and they have not made a profit. And yet they continue to accumulate.” It is something that we have been watching all year.

Image | Jonathan Borba

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